A lot of Wall Streeters complain about the dysfunctional U.S. Congress. Carl Icahn actually wants to do something about it.
The billionaire corporate raider announced recently that he’s putting up $150 million of his own money to seed a political-action group meant to force Congressional action on important business issues. Icahn says his top concern is a convoluted U.S. tax code that’s driving some companies overseas and keeping a lot of corporate money stashed abroad. Icahn’s money will fund a so-called super PAC able to accept unlimited donations it can use to fund ads and other efforts to forward the group’s agenda.
The Icahn super PAC would be the best-funded such group so far in the 2016 election cycle, with the second being Republican presidential candidate Jeb Bush’s super PAC, Right to Rise, which had raised $103 million as of June 30. (The next funding reports aren’t due until Jan. 31.) It would also launch Icahn into the top ranks of megadonors who now pony up millions every election cycle to advance their interests through hefty donations to super PACs supporting favored candidates.
The rise of super PACs and the torrent of money flowing to candidates is probably the biggest story in politics these days. But money doesn’t buy victory as often as frequent headlines about the fleecing of democracy might suggest. A recent Yahoo Finance investigation, for instance, found that big donors often back losing candidates. In many cases, overflowing war chests on both sides of a campaign basically cancel each other out, with external factors such as the economy or national political trends being more decisive than big donations.
Up till now, Carl Icahn has had a middling record as a political donor, which suggests his super PAC may end up being ineffective, no matter how much money it raises. Yahoo Finance examined Icahn’s political donations going back to 1998, and found that his “winning percentage”—the portion of candidates he gave money to who actually won—was just 51%. That’s eight percentage points lower than the average winning percentage for the top 10 donors we examined earlier this year.
Federal donor records show that Icahn and his wife Gail have donated to about 45 federal candidates since 1998, plus a number of organizations that back multiple candidates, such as the National Republican Senatorial Committee and the Michigan Republican Party. Overall, they’ve given about $600,000 to federal candidates and PACs.
That’s a lot of beer money, but megadonors such as Sheldon Adelson, Tom Steyer, and Michael Bloomberg have donated 50 to 150 times as much in a single two-year election cycle. If Icahn comes through with the $150 million for his super PAC, it would top the $100 million or so Adelson contributed to various groups in 2012, which is the standing record for a single donor.
Still, piles of money doesn’t guarantee electoral success. In the 2012 presidential election, for example, Adelson first backed Newt Gingrich, who lost in the primaries. Then he backed Mitt Romney, who lost in the general election to President Obama. Adelson’s $100 million bought precious little. Icahn has fared poorly in presidential elections, too, donating to Romney in 2012 and to John McCain in 2008. In 2004, Icahn hedged his bets, giving a small amount of money to both George W. Bush and John Kerry — assuring he’d pick a winner in that race.
Icahn leans heavily Republican these days, and he’s supporting GOP candidate Donald Trump for president. But he has given to Democrats as well, including current New York Sen. Charles Schumer and Hillary Clinton, when she was a New York senator. That suggests Icahn is a political pragmatist looking to get along with whoever’s in power — especially his home-state legislators — rather than an ideologue who backs outsiders whose views reflect his own, even if they might be out-of-step with mainstream voters.
About half of Icahn's candidates have been incumbents, which may make his 51% winning percentage even less impressive. Incumbents are usually very safe bets, since their reelection rate is higher than 90%. If Icahn had gambled more on challengers, his winning percentage would probably be well below 50%. Icahn has donated to some incumbents with very safe seats, such as Republican Sens. Charles Grassley and John McCain just this year. In prior years, he donated to House Speaker John Boehner. He also backed two incubments who lost: Republican Sen. Norm Coleman of Minnesota in 2008, and Democratic Sen. Tom Daschle of South Dakota in 2004.
Icahn’s super PAC will encourage Congress to pass a law slashing the tax on corporate profits being held abroad, which in theory would create a windfall of profit repatriation and boost government revenues, compared with the status quo. Icahn wants Congress to dedicate that new revenue to highway funding, which would create jobs, boost the economy and repair a lot of crumbling infrastructure.
It’s a rational plan with some bipartisan backing that many economists think is as good a way as any to fill a huge hole in Washington’s highway repair fund. Just because it’s rational, however, doesn’t mean Congress will do it. If there’s a limit to what money can buy, Carl Icahn may be about to bump into it.
Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.